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AGC's Data DIGest: Sept. 29-Oct. 2, 2015

Employment growth slows nationally and among metros but spending accelerates

Golden Arrow Money

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Nonfarm payroll employment increased by 142,000 in September, seasonally adjusted, and by 2,752,000 (2.0%) over 12 months, the Bureau of Labor Statistics (BLS) reported today. Construction employment rose by 8,000 for the month (to 6,396,000) and by 205,000 (3.3%) over 12 months, far below the gain of 298,000 (5.1%) in the previous year. The number of unemployed jobseekers who last worked in construction fell from 604,000 in September 2014 to 479,000 in September 2015, the lowest September total since 2000. The unemployment rate for such workers fell from 7.0% to 5.5%, the lowest September rate since 2001. (Industry unemployment data are not seasonally adjusted and should only be compared year-over-year, not across months.) The sluggish and geographically uneven growth in construction employment and the decline in the pool of experienced jobseekers, despite acceleration in spending (see below), are consistent with the results of a survey AGC released on September 10 that found 86% of contractors report difficulty finding qualified hourly craft or salaried professional workers.

Construction employment, not seasonally adjusted, increased from August 2014 to August 2015 in only 163 (46%) of the 358 metro areas (including divisions of larger metros) for which the BLS provides construction employment data, decreased in 153 (43%) and was stagnant in 42, according to an AGC release and map on Monday that analyzed BLS data. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) The number of metros with job increases was the smallest since late 2011. It appears likely that employment gains in some metros were held down by a lack of available workers rather than lack of projects. However, other metros probably reflected the effects of the plunge in oil and gas exploration and services business. The largest job losses were in two metros that previously were among the leaders in construction job gains: the Fort Worth-Arlington, Texas division (-6,000 combined jobs, -8%) and Houston-The Woodlands-Sugar Land (-3,700 construction jobs, -2%), followed by Bergen-Hudson-Passaic, N.J. (-1,900 combined jobs, -6%); Akron, Ohio (-1,800 combined jobs, -13%) and New Orleans-Metairie, La. (-1,800 construction jobs, -6%). The largest percentage decline was in Santa Fa, N.M. (-22%, -600 combined jobs), followed by Gulfport-Biloxi-Pascagoula, Miss. (-20%, -1,700 combined jobs); Lawrence-Methuen Town-Salem, Mass.-N.H. (-20%, -500 combined jobs) and Las Cruces, N.M. (-19%, -700 combined jobs). Denver-Aurora-Lakewood added the largest number of jobs (10,400 combined jobs, 11%), followed by the Seattle-Bellevue-Everett division (8,700 jobs, 11%); the Anaheim-Santa Ana-Irvine, Calif. division (7,500 jobs, 9%) and Atlanta-Sandy Springs-Roswell (7,300 construction jobs, 7%). The largest percentage gains occurred in Weirton-Steubenville, W.Va.-Ohio (28%, 500 combined jobs); Fairbanks, Alaska (22%, 700 construction jobs); Wenatchee, Wash. (17%, 400 combined jobs) and Beaumont-Port Arthur, Texas (16%, 3,100 combined jobs).

Construction spending in August reached a seven-year high of $1.086 trillion at a seasonally adjusted annual rate, 0.7% higher than the July rate and 14% higher than a year before. The year-over-year growth rate was the fastest since March 2006. Growth was widespread: private nonresidential construction spending increased 0.2% for the month and 17% over 12 months; private residential, 1.3% and 16%, respectively; and public construction, 0.5% and 7.0%. Among private nonresidential segments, in descending order of August size, manufacturing construction soared 1.5% and 58% (led by a year-over-year near-doubling of chemical manufacturing plants and near-tripling of transportation equipment plants); power, -0.1% and -8.8% (comprising a 21% leap in oil and gas pipelines and field structures partly offsetting a 21% drop in electric power facilities); commercial (retail, warehouse and farm), -1.5% and 0.4%; and office, -0.3% and 28%. New multifamily construction jumped 4.8% and 25%; new single-family, 0.7% and 14%; and residential improvements, 0.7% and 17%. Of the two largest public segments, highway and street construction slipped 0.4% for the month but rose 7.0% over 12 months, while educational slipped 0.2% from July but gained 4.4% since August 2014.

Data centers are reportedly still a fast-growing construction niche and are spreading to new locations, although Census does not break them out from other nonresidential categories. "A mega data center hub of sorts is forming in Reno, which has not historically been a major high-tech destination," the e-newsletter Data Center Knowledge reported on September 23. "Right across the highway from the Switch site is a growing Apple data center campus. Rackspace is eyeing the possibility of building a large data center there as well." The Associated Press reported on Wednesday, "Amazon subsidiary Vadata Inc. is investing about $1.1 billion to build three data centers in suburban Columbus, Ohio....Alabama, which passed a law in 2012 offering special tax breaks to data centers, landed its first blockbuster recruit this summer: a $600 million Google data center to be built at the site of an old coal-fired power plant with the help of $81 million of incentives."

Pipeline construction also continues to spread. "The PennEast Pipeline company on Thursday announced it would file its formal application with federal authorities for permission to construct a $1.2 billion, 118-mile natural gas pipeline stretching from northeastern Pennsylvania to Mercer County," New Jersey, NJ.com reported on September 24. The Associated Press reported on September 18, "Four energy partners formally asked the federal government on Friday for permission to build a 564-mile natural gas pipeline in West Virginia, Virginia and North Carolina" with an estimated cost of $5 billion.

The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved. Sign up at http://store.agc.org.